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The U.S. housing sector's long and winding road back to health continues. Home prices in 20 cities declined at a 13.3 percent annual pace in July -- a substantially smaller decline than June's annual pace -- according to the S&P/Case-Shiller U.S. National Home Price survey, released Tuesday.
Economists surveyed by Bloomberg News had expected the S&P/Case-Shiller Home Price Index to fall 14.2 percent in July from a year earlier. The index fell 15.4 percent in June, 17.1 percent in May and 17.9 percent in April. Further, home prices in the 10-city index declined at a 12.8 percent annual rate in July; the 10-city index fell at a 15.1 percent annual rate in June, and at a 16.8 percent rate in May.
After 16 consecutive months of record annual declines, beginning in October 2007 and ending in January 2009, the indices have now shown six consecutive months of improvement in annual returns.

"The rate of annual decline in home price values continues to decelerate and we now seem to be witnessing some sustained monthly increases across many of the markets," David M. Blitzer, chairman of the index committee at Standard & Poor's, said in a statement.

Housing Sector Analysis: Record another small victory for the U.S. housing sector. Price declines in 20 major cities continue to decelerate on a year-over-year basis - which means they are bottoming. And, as noted, on a month-over-month basis, prices are rising in most major American cities. Still, investors -- and certainly potential home buyers -- should not become overly bullish. Home inventories remain high, and any signs of weakness, or the failure of the U.S. economy to recover on time, could cause prices to fall back. Further, household formation, due to a lack of job growth, remains flat -- and that historically has weighed on both home sales and prices. That said, if the nation's economy continues to recover and job growth resumes, the firming of home prices should continue.